Published 4:00 am, Monday, May 4, 1998

1998-05-04 04:00:00 PDT STATE -- A new state report calls for doctors who perform complex medical tests in their offices to pay fees to support the watchdog agency that inspects California's medical testing labs.

The report by legislative analyst Elizabeth Hill also recommends that lawmakers draw up new regulations to require doctors conducting any but the simplest lab tests in their offices to have a licensed clinical laboratory technician on staff.

Requested by state Senator Mike Thompson, D-Santa Rosa, the report followed a story in The Chronicle about cutbacks in the Laboratory Field Service branch of the state Department of Health Services.

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The legislative analyst's findings will be aired today during a hearing of the Senate budget subcommittee in Sacramento.

The Laboratory Field Services branch is responsible for assuring that medical tests ranging from Pap smears to AIDS antibody screens are performed correctly. An estimated 80 percent of all medical decisions derive from those diagnostic tests.

Citing a budget shortfall, the Wilson administration last month reduced the agency's staff of laboratory field inspectors from 20 to 16, despite an internal recommendation that the staff be expanded to 30.

One of the reasons for the chronic underfunding of the watchdog group was a decision, won by lobbyists for the California Medical Association, that exempts doctor office labs from paying state fees to cover the cost of inspections.

But in her report, the legislative analyst found that fees of $800 per lab would not pose "an unreasonable fiscal burden" on lab operators. Hill also noted that the fees could be scaled back for labs conducting less complex tests.

The legislative analyst also called for reinstating four inspector positions that were dropped on April 1.

Volz, who has circulated memos to key lawmakers outlining his charges, said he was pleased that the subcommittee would hold a hearing.

"I'm at least glad these issues will see the light of day," he said. "I will withhold judgment until the recommendations are implemented."

In her report to Thompson, Hill said the Department of Health Services "has not been aggressive" in solving the money woes of the lab inspection program, opting instead to let the program adapt to whatever funds are made available.

The health department acknowledged that the inspection agency's activities were underfunded by $600,000 this year. The legislative analyst noted that some $330,000 in fee income for the program had been inappropriately diverted to a different health department agency.

It also noted that the department had received $400,000 from the settlement of a lawsuit against a commercial laboratory in the prior fiscal year.

Department of Health Services administrators and California Medical Association executives did not comment on the state report.

Previously, medical association legislative analyst Joan Hall defended the exemption from state lab fees instituted in 1996. But state health officials say the lost fees so far amount to $2.4 million. Hall noted that doctors still pay fees to the federal government to support lab inspections.